1 eFX Daily colour

1.1 FX Spot

1.1.1 Overview

(Mar-04) Equities fluctuated as President Donald Trump’s tariffs on Canada, Mexico, and China went into effect (midnight New York time), leading to extended losses in oil. Furthermore, OPEC+ plans to revive halted production:

  • Oil trades at $71.09 per barrel, and was down 2.11% yesterday.
  • Gold trades at $2886 an ounce, and was up 1.26% yesterday.

The tariffs prompted Canada to announce a sweeping package of levies and China to impose tariffs up to 15% on US exports. Investors sought safer havens due to rising geopolitical tensions and the potential for retaliatory levies. This broad risk-off sentiments has seem EM currencies struggling and some sell-off in risky assets as we saw bitcoin fail to main its gains after President Trumps announcement for crypto strategic reserves.

  • Bitcoin was down 9.53% yesterday and now trades at $83K after seeing a high of $94K yesterday.

In Asia, attention turned to the National People’s Congress meeting in Beijing, where measures to stimulate the economy were anticipated. Beijing considered retaliatory actions on US agriculture and food products.

Recent US economic data showed disappointing results, including weaker housing, rising unemployment claims, and a drop in personal spending. Additionally, Trump paused all military aid to Ukraine, increasing pressure on President Volodymyr Zelenskiy.

The pressure on ZAR is still prevailing and we saw ZAR failing to benefit from the weaker USD environment seen yesterday. We expect the pressure on ZAR to ease after the budget speech next week Wednesday (12 March), but for now, we trade above 18.60.

Against the crosses:

  • EURZAR trades at 19.5195.
  • GBPZAR trades at 23.6373.

Key events today:

  • SA GDP, 11h30.
  • Eurozone unemployment, 12h00.
  • President Donald Trump’s speech to a joint session of Congress, Tuesday

1.1.2 US

(Mar-04) President Donald Trump paused military aid to Ukraine after a heated meeting with President Volodymyr Zelenskyy. This decision aims to increase pressure on Zelenskyy amid escalating tensions.

1.1.3 SA

(Feb-24) The Rand’s VWAP for February was 18.35. By the end of the month, the Rand faced headwinds, fluctuating from a low of 18.43 to a high of 18.72. We saw marginal profits in the weaker USD environment yesterday, closing at 18.60. SA continues to grapple with a sluggish economy and political uncertainty, with the market now anticipating the Budget speech next Wednesday, March 12.

1.1.3.1 eFX Volumes

  • Overall volumes

(Mar-04)

  • Price to volumes

(Mar-04)

  • Liquidity hours across currency pairs
  • Currency positions

(Mar-04)

1.1.3.2 USDZAR levels

(Mar-04) We expect the Rand to reprice after the budget speech next week Wed, until then, we should continue trading the range 18.85 - 18.40, with risks to the topside as high as 19.10.

1.1.3.3 USDZAR spreads

(Mar-04)

1.1.4 Key events this week:

  • Eurozone unemployment, Tuesday
  • President Donald Trump’s speech to a joint session of Congress, Tuesday
  • China Caixin services PMI, Wednesday
  • Eurozone HCOB services PMI, PPI, Wednesday
  • US ADP employment, ISM services index, factory orders, Wednesday
  • Fed’s Beige Book, Wednesday
  • Eurozone retail sales, ECB rate decision, Thursday
  • US trade, initial jobless claims, wholesale inventories, Thursday
  • US Treasury Secretary Scott Bessent speaks, Thursday
  • Fed’s Christopher Waller and Raphael Bostic speak, Thursday
  • Eurozone GDP, Friday
  • US jobs report, Friday

1.2 FX Volatility Update

1.2.1 Update

By Thuto Mukena - Institutional Sales Specialist (Mar-04)

  • Overview

Tariff execution day finally here, with Trump confirming yesterday that the much-anticipated tariffs on Canada and Mexico are taking course. Ahead of this, spot momentum has been quite interesting. Locally, the ZAR has remained range-bound for most of the past sessions, though leaning more on the weaker side as current market uncertainty supported broad dollar gains. Yesterday, after five consecutive sessions of weak momentum, the local unit strengthened to form its intra-session high at R18.5325/$ as the EM space saw some recovery at the back of a weaker dollar. The local vol market on the other hand traded better bid yesterday; interestingly, the 1-week implied vol tenor was the only outlier, dropping by 0.59 vol pp to close off the session at 11.47%, while the rest of the tenors edged higher, signaling that much of the uncertainty priced in sits at the longer dates relative to this week, despite the risk events lined up.

  • G10 & EM

Yesterday, spot positioning saw some clawback of dollar longs, with US PMI manufacturing data printing at 50.3 vs. 50.8, exerting further pressure on the US dollar. On the tariffs front, the loonie attempted a recovery to 1.4367 on the day as the US dollar edged lower; however, that momentum against the greenback was short-lived, making the pair the outlier in the G10 space to close off the session weaker. Implied vols across both the high-beta and developed market spaces traded broadly lower, with the only outliers being USD/CAD and USD/MXN 1-week implied vols, which closed off the session firmer by 3bps and 92bps, respectively. This morning, the US dollar index opens a touch weaker with minimal movement, despite fresh headlines of Trump signing an action to impose 20% tariffs on China, while China is reportedly planning countermeasures, including tariffs of up to 15% on agricultural goods such as wheat, chicken, and corn.

  • Day Ahead

The rand kick started off the session weaker at R18.5796/$ to the green back. We continue to look for the 18.50 to 18.80 range, with a break and close either side for new direction

Against the crosses:

  • EUR/ZAR kicks off at 19.5070
  • GBP/ZAR starts at 23.4550

On the data front today, locally we have GDP figures up next at 11:30 SA time. In the Eurozone Unemployment data stands ahead of us today.

1.3 Africa

1.3.1 Update

By sizwe Mfayela - Institutional Sales Specialist (Mar-04)

  • Egypt
    • Egypt Feb PMI falls to 50.1 vs 50.7 in Jan
  • Ghana
    • Finance minister Cassiel Ato Forson says Ghana needs to take radical measures to avoid its current $4.5bio of energy debt from doubling to $9bio by 2027. The energy sector costs the country an estimated 2% if GDP annually. The country is experiencing high electricity generation costs due to limited renewable energy and lack of competition in the energy sector.
  • Nigeria
    • Nigeria LNG natural gas output fell 80% as vandalism and sabotage have slowed down plant operations at the plant and reduced exports of LNG. Only two out of six processing units are currently functional.
    • Nigeria Feb PMI rises to 53.7 vs 52.0 in Jan
  • Zambia
    • Zambia electricity utility faces financial difficulties as it has been forced to spend more on expensive electricity imports from neighbouring countries and thermal power generation while experiencing a drop in export earnings.
  • Eurobonds
    • After opening with ETF buyers and creeping closer to tariff d-day, there were RM and HF sellers into the early strength with the credits with recent negative catalyst (GHANA, and SENEGL) faring the worst. However, some of the stronger credit stories like NGERIA were beginning to come out from real money accounts as well.
    • ANGOL had further steepening on the day, carrying over the momentum of that trade which began as the roadshow hit the US during the middle of last week. Liquidity and hidden debt concerns seem to be getting priced out of the curve.
    • GHANA: The 35s have led the way lower since late last week, but HFs were in to sell the 29s late in the session and risk was tough to recycle across the curve into the close
    • KENINT closed +0.25-0.50pts with two-way flows across the real money client set for the most part, while local interest has been relatively muted of late. ew KENINT 36s traded the heaviest, with net sellers from locals, HFs and RM client sets. The desk is of the view that the market should see some local buyers come through after the 27s tender settlement date and more buyers leading up to the index inclusion date in end March.
    • SENEGL: Some HFs kicking tyres on covering shorts and adding longs on weakness brought with more RM selling, the 28s continue to be hardest hit.
    • SOAF: front-end and belly bonds continued to trade with a bid tone, while the long-end bid felt softer. As a result, the curve steepened ~3bps 10v30. Offshore RM and ETF were net buyers of risk on the curve, while locals were sellers.

1.3.2 Economic data

Economic data releases